Loans aren't necessarily bad. They can be good too

If something sounds too good to be true,” goes the old cliché, “it probably isn’t.” Similarly, many people perceive a loan as something that’s best avoided. It’s best to be self-reliant, they feel. And why bother with the paperwork? Thanks to such attitudes, loans are something that people opt for only as a last resort.

- Adhil Shetty

However, taking a loan may actually prove not so bad in the long run. In fact, never having taken a loan may be a big negative. Surprised?

Here are some insights into how taking loans helps you create a better financial future for yourself.

No Credit History, No Loan

Debt, which many people view with trepidation, is a grossly misunderstood concept. Having a perfect, debt-free record may sound good but it works against you in case you need a loan. For example, someone having a reasonable monthly income but no credit history may not be viewed favourably by banks. Yet, someone with a relatively lower income but a healthy credit history may not face such trouble.

If you haven’t ever availed of a loan, there is no known public record of your debt or its repayment cycle. As a result, any lender will not be able to gauge your repayment credentials. Absence of a credit score is just as bad as having a poor credit score.

Here are some things you can do to script a ’good’ credit history.